Senate vote on online sales tax possible next week

April 17, 2013|Reuters

U.S. senators could vote as early as next week on legislation that would give states the authority to collect sales taxes from online purchases, Democratic Senate aides said on Wednesday, a significant step after years of false starts.

Though the legal change provided by the bill has enjoyed bipartisan support for years, previous versions of this legislation have faced opposition from some online retail companies and lawmakers from both parties.

Momentum has been building in the Senate since 75 lawmakers showed their support with a symbolic vote last month.

Backers say that vote should assuage House Republicans, some of whom believe the law would amount to a tax hike.

"We don't think it is a tax increase. We think it is a collection issue," said David French, chief lobbyist for the National Retail Federation, which represents many traditional "brick-and-mortar" stores like Walmart Stores Inc that have long sought this legislation.

States can only tax Internet sales made by companies with a physical presence within their borders. In practice, that means online retailers such as Amazon.com Inc charge sales tax in some states and not in others.

Tension among Democrats has prevented a vote from coming to the Senate floor. The second-ranking Senate Democrat, Dick Durbin, is pushing the bill, while Senate Finance Committee Chairman Max Baucus has resisted it.

Similar legislation has been introduced in the House of Representatives, but it faces opposition from key lawmakers in that chamber.

Amazon on Wednesday reiterated its support for the legislation. Other online retailers like eBay Inc. oppose the bill.

Jonathan Johnson, an executive at Overstock.com, said he was in Washington on Wednesday lobbying House and Senate lawmakers to vote against the legislation.

State and local governments support the legislation because it would allow them to tap uncollected revenue. Fitch Ratings estimates that states currently lose $11 billion in tax revenues without the online levy.